A loan-to-value is the ratio of your mortgage balance to your home’s value. It is quickly calculated by taking your mortgage balance and dividing it by your home’s value. For example, if your mortgage balance is $200,000 and your home is valued at $400,000, you have an LTV of 50%. LTV is an important factor in any mortgage transaction. It is used to determine whether or not a borrower must purchase private mortgage insurance (PMI).
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